Hiba Mahamadi 15 October 2018

Councils warn £1bn is at risk of being returned to EU

Nearly £1bn earmarked for local investment will be lost if the Government does not act soon, the Local Government Association (LGA) has warned.

Some £914m of the European Social Fund (ESF), which is the EU’s main investment in employment, skills and training in member states, will be returned if it is not spent within the next two years.

The LGA has raised concerns about the Government’s slow pace of allocating the fund, of which more than half remains unspent.

Chairman of the LGA’s Brexit taskforce, Cllr Kevin Bentley, said councils will face massive financial shortfalls if this isn’t done.

He added: ‘This funding has been used by local areas to create jobs, support small and medium enterprises, deliver skills training, and invest in critical transport and digital infrastructure, and boost inclusive growth across the country.’

The fund has been described as a 'lifeline' for development at a local level but it can only be allocated by central government.

Smith Square has called for this power to be transferred from the Department for Work and Pensions to local areas instead.

Funding from the ESF has kick started skills and employment projects worth millions of pounds across the country, including in Essex, Warwickshire, West Yorkshire and Gloucestershire.

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